OpenStack in Financial Services: What Can You Do With It?

OpenStack adoption is growing and there are practical uses in the financial services space that have already been deployed.

In cloud computing, there is Amazon AWS (Amazon Web Services) and then there is everyone else. While AWS remains the behemoth in terms of adoption as well as revenues, it is generally considered a public cloud provider, although Amazon is working on rapidly changing perception by developing new capabilities like VPC (Virtual Private Cloud).

On the other hand, a very high percentage of enterprise customers in financial services are looking at OpenStack. The just concluded OpenStack Summit 2013 in Hong Kong had attendance of approximately 3,500 industry participants. Judging by the crowds, there is clearly a huge wave of interest -- if not outright adoption -- in this cloud technology. We can confirm that most large banking clients are beginning to invest in proof of concepts and pilots on OpenStack.

For the uninitiated, OpenStack promises a complete ecosystem for building out private clouds. The OpenStack Foundation is backed by some major technology players, including AT&T, Canonical/Ubuntu, HO, IBM, Nebula, Rackspace, Red Hat and Suse. Built from multiple sub-projects as a modular system -- OpenStack could allow an IT organization to build out a scalable private (or hybrid) cloud architecture that is based on an open standard, unlike AWS. This is particularly relevant in financial services given the cost and regulatory pressures banking organizations are under, as well as a need to derive competitive advantage from agile implementations without incurring the security and business risks of a public cloud.

One of the key differentiator's of the OpenStack project is that it is composed up of various sub-projects and one does not need to do an end to end implementation of the entire ecosystem to realize it's benefits. It is designed to provide a very high degree of flexibility as modules can generally be used in combination, or be used as one off projects.

The core and the most important projects that comprise OpenStack are the following:

Compute (Nova): The OpenStack cloud operating system enables enterprises and service providers to offer on-demand computing resources, by provisioning and managing large networks of virtual machines.

Object Storage (Swift): OpenStack has support for both Object Storage and Block Storage, with many deployment options for each depending on the use case.

Network (Neutron): OpenStack Networking is a pluggable, scalable and API-driven system for managing networks and IP addresses.

Volumes (Cinder): Cinder provides an infrastructure for managing volumes in OpenStack. It was originally a Nova component called nova-volume, but has become an independent project since the Folsom release.

In addition to the core modules are projects that are still in incubation mode and are thus considered relatively immature. Chief among these newer projects are:

Heat (Cloud Orchestration)

Ceilometer (metering/metrics)

Savannah (Hadoop on OpenStack)

OpenStack operates on a release cadence of two major releases every year around April and October. The 2013 saw Grizzly, the seventh release of the open source software for building public, private, and hybrid clouds, and the recently released Havana, the newest version of the software.

Infrastructure as a Service (IaaS) provides cost and agility benefits, but how can the industry leverage that to build applications and platforms that provide new business capabilities? The real promise of OpenStack is that once the initial standardization and consolidation is achieved (in terms of compute, storage and networking, for instance) applications can then be either extended or created to provide lightweight and dynamic capabilities that directly align to the business.

Some of these benefits include the freeing of the line of business (LOB) within larger banks from having to work with a traditional IT engagement model to a DevOps model, simultaneously transforming the IT group from an infrastructure provider to a service provider (via a SaaS model).

DevOps Self Service: Large development groups with LOBs typically have hundreds of developers. The new DevOps model essentially turns developers into self service consumers of infrastructure. Developers can optionally leverage a PaaS (Platform As A Service) offering running on their OpenStack cloud to create adaptable and self-healing applications that can scale up or scale down based on business needs. This enables the Operations teams, who are not known to take well to constant change in the infrastructure, to work hand-in-hand with developers who are expected to implement changing applications day in and day out. This model is a great fit for financial services, especially given the industry’s emphasis on risk management and rapidly changing business conditions such as high frequency trading, stock market changes, home mortgages or wealth management platforms.

SaaS Services: On the SaaS front, we are already witnessing the build out of services in internal clouds in a SaaS model. These span a wide spectrum. The low hanging SaaS fruit include Database as a Service, Messaging as a Service and Business Rules as a Service. These tools can build business capabilities such as Risk Management as a Service or Analytics as a Service. The other key point with these services is that innovations in software defined networking or Big Data, for instance, are all supported from the get go. The OpenStack foundation has taken the best aspects of the velocity of a community project to incorporate the best advances in the industry.

OpenStack moving up the business stack into areas like business processes, data services, integration etc. We are still a few years away from this promised land but that is the endgame.

OpenStack is helping drive a huge amount of business led innovation on erstwhile legacy and slow-to-adapt infrastructure. Please watch this space for more topical use cases where banks are bringing in the best of PaaS, SaaS and XaaS via an OpenStack based IaaS.

As Chief Architect of Red Hat's Financial Services Vertical, Vamsi Chemitiganti is responsible for driving Red Hat's technology vision from a client standpoint. The breadth of these areas range from Platform, Middleware, Storage to Big Data and Cloud (IaaS and PaaS). The ... View Full Bio